Mpc Minutes Heighten Uncertainties About A December Cut

Commenting on the publication today of MPC minutes relating to the meeting held on 7/8 November David Kern, economic adviser to the British Chambers of Commerce, said: “The minutes reveal that the MPC voted by a majority of 7 to 2 to keep the interest rate unchanged at 5.75%. The argument of those supporting a cut were very powerful in our view, but the sizeable majority for a no change will heighten uncertainties about a December cut“The Bank of England’s recent quarterly inflation report confirmed our assessment that two interest rate cuts would be needed in the next twelve months to ensure that CPI inflation will not undershoot the target. On this basis a cut in interest rates is a question of time only.“We feel the majority of MPC members have given too much weight to the strong historical Quarter 3 growth figures, and too little weight to the worsening turmoil in the financial markets and the consequent tightening in credit conditions. “We urge the MPC to announce a small cut in interest rates at its December meeting.”